Also known as: equities of redemption · right of redemption
Written by attorneys · grounded in primary & secondary sources — see below
The mortgagor's right to recover property subject to a mortgage by paying the debt before foreclosure. The right persists until a valid foreclosure sale cuts it off. Agreements that unreasonably restrict or eliminate the right are void.
Emmett Egan granted a mortgage on his warehouse to Echelon Security. After default, Echelon claimed immediate title and rents under the title theory. Emmett tendered full payment before any foreclosure sale. The court recognized his equity of redemption and required reconveyance upon payment.
Eva Espinosa granted a security interest in her vehicle while residing in State X. The vehicle was located in State Y. Both states applied identical rules on a debtor's right of redemption. The court aggregated the contacts and treated the transaction as occurring in a single state for choice-of-law purposes.
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Esme Ellington defaulted on her mortgage held by Elite Dynamics. Elite Dynamics completed a judicial foreclosure sale. Esme attempted to tender payment the day after the sale. The court held that the sale had terminated her equity of redemption.
Elliot Edmonds lost his farm at a foreclosure sale to Everest Holdings. State law granted a six-month period for statutory redemption. Elliot paid the sale price plus interest within that window. The court restored title to Elliot free of the purchaser's claim.
Edith Eberhardt signed a mortgage containing a side letter that automatically vested title in the lender upon any missed payment. After default, the lender recorded a deed and refused tender. The court voided the side letter as an impermissible clog on the equity of redemption.
Emily Ellis granted a mortgage and simultaneously gave the mortgagee an option to purchase the property at a fixed price. Upon default the mortgagee sought to exercise the option. The court refused enforcement because the option functioned as a clog on the equity of redemption.
The equity of redemption ends at a valid foreclosure sale. Statutory redemption, where available, is a separate post-sale right that allows redemption by paying the sale price within a statutory period.
Supporting sources
Courts treat such agreements as void because they clog the equity of redemption. The mortgagor retains the right to pay the debt and recover the property until a proper foreclosure occurs.
Supporting sources
Under the title theory the mortgagee holds legal title and the mortgagor possesses only the equity of redemption. Under the lien theory the mortgagor retains title subject to the mortgage lien. The distinction influences possession and foreclosure procedures but does not eliminate the redemption right itself.
Supporting sources
…defendants, arguing that the option agreement violated the New York statutory prohibition against remote vesting and clogged its equity of redemption under the mortgage. Defendant Pergola subsequently served Symphony with separate notice of default dated April 4,1985, informing Symphony that it was exercising the option on behalf of all…